Wednesday, July 02, 2008

Why the Iraq War is Destroying the US Economy

The cost of Bush's war on Iraq has surpassed one trillion dollars but there is no evidence of it benefiting the US economy. It is time to drive a stake through the heart of the malicious lie that wars are good for the economy. Only the Military/Industrial complex benefits from war and what is good for the MIC is NOT good for the country.

The MIC is a drag on the economy, an economic black hole into which is drained the economic and creative resources of the nation. War itself is a Faustian bargain. The hour of midnight is approaching.

The economic benefits of building a tank are temporary. Once built, the tank is a drag, requiring more to upkeep than war booty can justify. It returns absolutely nothing for the investment. In the end, only the military contractors building the tank or maintaining it have benefited and they will have done so at taxpayer expense. On a larger scale, the Pentagon is an economic black hole, having sucked the life blood from the US economy.

One of the most pernicious economic myths is the idea that war helps the economy. In reality, war is destructive and it always results in economic retrogression and misery.

The US economy didn’t really recover until 1946, when the immediate postwar period witnessed the dismantling of the command economy in favor of a much more liberalized market economy. Peace brought military demobilization, deregulation, and perhaps most importantly, a seventy-five percent reduction in government spending. This was a genuine peace dividend and it set the stage for America’s legendary post-war economic boom.

The idea that wars and military spending increases are good for the economy is sold and promoted. In fact, new studies now confirm what I have always believed and what Gore Vidal had stated in his classic: The Decline and Fall of th American Empire.

Nobel Prize-winning economist Joseph Stiglitz has blamed the Iraq war for sending the United States into a recession. On Wednesday, he told a London think tank that the war caused the credit crunch and the housing crisis that are propelling the current economic downturn. Testifying before the Senate's Joint Economic Committee the following day, he said our involvement in Iraq has long been "weakening the American economy" and "a day of reckoning" has finally arrived.

Now --war critics have the economic data and models proving that military spending 'diverts resources from productive uses, such as consumption and investment, and ultimately slows economic growth and reduces employment.' This thesis is likewise confirmed in a paper by Thomas E. Woods at: http://www.mises.org/journals/scholar/woods2.pdf

The obvious lies about the war have been exposed. Not enough attention has been focused on the one of the biggest con jobs of them all ---right up there with WMD.

White House economic adviser Lawrence Lindsey was the exception to the rule, offering an "upper bound" estimate of $100 billion to $200 billion in a September 2002 interview with The Wall Street Journal. That figure raised eyebrows at the time, although Lindsey argued the cost was small, adding, "The successful prosecution of the war would be good for the economy.”

The US has been in a state of near perpetual war since the so-called Spanish-American war made of this nation an empire. But it was, specifically, according to Gore Vidal in The Decline and Fall of the American Empire, the moment at which the US became a net debtor nation that the US empire ceased to be an 'empire'. Americans are led to believe that the US can simply 'war' its way out of economic disaster. In fact, the US has been fighting wars with monies it doesn't have. The Iraq war may, indeed, finish us off before Bush even has a chance to compound his idiocy against Iran.

For Immediate Release: May 1, 2007

Contact: Lynn Erskine, 202-293-5380 x115

Washington, DC: The Center for Economic and Policy Research released a report today estimating the economic impact of increased US military spending comparable to the spending on the Iraq war. The report, presenting the results of a simulation from the economic forecasting company Global Insight, shows the increased level of military spending leads to fewer jobs and slower economic growth.

For the report, The Economic Impact of the Iraq War and Higher Military Spending, by economist Dean Baker, CEPR commissioned Global Insight to run a simulation with its macmacroeconomic del. Global Insight's model was selected for this analysis because it is a commonly used and widely respected model. It estimated the impact of an increase in annual US military spending equal to 1 percent of GDP (approximately equal to the military spending increase compared with pre-September 11th baseline).

The projections show the following:

-- After an initial demand stimulus, the effect of increased military spending turns negative around the sixth year. After 10 years of higher defense spending, there would be 464,000 fewer jobs than in the baseline scenario with lower defense spending.

-- Inflation and interest rates are considerably higher. After 5 years, the interest rate on 10-Year Treasury notes is projected to be 0.7 percentage points higher than in the baseline scenario. After 10 years, the gap would rise to 0.9 percentage points.

-- Higher interest rates lead to reduced demand in the interest-sensitive sectors of the economy. After 5 years, annual car and truck sales are projected to go down by 192,200 in the high military spending scenario. After 10 years, the drop is projected to be 323,300 and after 20 years annual sales are projected to be down 731,400.

-- Construction and manufacturing are the sectors that are projected to experience the largest shares of the job loss.

"It is often believed that wars and military spending increases are good for the economy," said Baker. "In fact, most economic models show that military spending diverts resources from productive uses, such as consumption and investment, and ultimately slows economic growth and reduces employment."

The report recommends that Congress request the Congressional Budget Office produce its own projections of the economic impact of a sustained increase in defense spending. If wars are disastrous for the economy, then why does government insist upon fighting them when clearly 'national security' is simply not at risk?

America's ruling elite have found nirvana --a war which need never end, a war in which victory is impossible to define and would not be recognized if it occurred. But --have they killed the goose that laid the golden egg? A war in which victory is, in fact, impossible. A war which achieves precisely what it was intended to achieve: the enrichment of a tiny ruling elite for whom your rights mean absolutely nothing. It is to this elite that wealth flowed profusely. It did NOT trickle to you.

For big government we now have "The Perfect War," everywhere and nowhere, secret and interminable. The war will justify ever expanding police powers, higher taxes, and more controls over the citizenry. You can see easily how Washington thrives on war. Since Sept 11th, there have been no nasty challenges to government spending and waste, no tedious debates over things like social security "lockboxes," nor "political" attacks upon the Presidency. Congressmen and Think Tank experts get lots of TV time and most everyone jumps to obey government orders and support more regulations. Any groups opposed to American military interventions overseas appear unpatriotic and are marginalized, while press coverage of the war is restricted, using the last Gulf War as a model. Big Government, as Orwell wrote, thrives from unwinnable wars; it doesn't get any better than this.

War is no longer waged by nations but by huge multi-national corporations hijacking the apparatus of state for the purposes and aims of war. Simply, the big corporations make their 'living' killing people. The most obvious beneficiaries are gun and armament manufacturers and the hired killers of Blackwater, Bush's Praetorian Guard. The manner in which John McCain has whored himself out to various huge corporation --all benefiting from Iraq --is a case worthy of careful study. The amount of money that McCain has raised by selling out to the war lobbies and profiteers is enough to make true patriots puke.

If you’re a CEO of one of America’s largest corporations and have enjoyed the Presidency of George W. Bush, a contribution to the McCain campaign is looking like a pretty good investment.

A new report from the Center For American Progress Action Fund finds that a key piece of John McCain’s tax plan — cutting the corporate tax rate from 35% to 25% — would cut taxes by almost $45 billion every year for America’s 200 largest corporations as identified by Fortune Magazine.

The fact that the MIC is enriched by a war that depresses, in fact, destroys the economy is the picture of a parasite which kills its host! It's also the very image of tyranny.

A tyrant is a single ruler holding vast, if not absolute power through a state or in an organization. The term carries connotations of a harsh and cruel ruler who place their own interests or the interests of a small oligarchy over the best interests of the general population which they govern or control. This mode of rule is referred to as tyranny. Many individual rulers or government officials get accused of tyranny, with the label almost always a matter of controversy.

One is reminded of John Maynard Keynes' prescription for full employment.

If the Treasury were to fill old bottles with banknotes, bury them at suitable depths in disused coalmines which are then filled up to the surface with town rubbish, and leave it to private enterprise on well-tried principles of laissez-faire to dig the notes up again (the right to do so being obtained, of course, by tendering for leases of the note-bearing territory), there need be no more unemployment and, with the help of the repercussions, the real income of the community, and its capital wealth also, would probably become a good deal greater than it actually is. It would, indeed, be more sensible to build houses and the like; but if there are political and practical difficulties in the way of this, the above would be better than nothing.

Certainly --there are more productive, meaningful and creative ways of keeping the genius and labor of good people employed for the greater good of our species and the precious earth we live on. Keynes was correct, however, when he proposes that just 'digging' up bank notes in a landfill is preferable to the destructive and insidious 'industry of war'!